We've Agreed Our Finances: What Next?

Reaching a financial agreement during mediation is a major milestone. It represents hours of discussion, compromise, and a shared commitment to moving forward. However, the work doesn't end when you and your ex-partner shake hands and leave the mediation room. To ensure that your agreement is clear, enforceable, and provides you with long-term security, it's essential to take the right legal steps.

In this article, we'll walk you through what happens after you've agreed on your finances in mediation, why it's important to formalise your agreement, and the process of turning your mediation agreement into a legally binding consent order.

Why You Need to Formalise Your Agreement

It might be tempting to think that once you've reached an agreement, you can simply walk away and get on with your life. Unfortunately, without formalising your agreement, you could be leaving yourself vulnerable to future disputes or legal complications.

Here's why formalising your agreement matters:

1. Legal protection: An informal agreement has no legal standing. If one party later changes their mind or circumstances change, the other party has no legal recourse to enforce the original agreement.

2. Finality: A consent order provides what's known as a "clean break," meaning that neither party can make future financial claims against the other (subject to the terms of the order). Without this, either party could potentially bring a claim years down the line, even if you thought everything was settled.

3. Clarity: A formal document removes ambiguity. It clearly sets out what has been agreed, leaving no room for misunderstandings or misinterpretation.

4. Peace of mind: Knowing that your agreement is legally binding and enforceable gives both parties confidence and security as they move forward.

Step 1: Your Mediator Will Record the Agreement

Once you've reached a financial agreement in mediation, your mediator will prepare what's called an Open Financial Statement (OFS) or Memorandum of Understanding. This is a detailed document that sets out everything you've agreed, including:

• How property and assets will be divided

• Any pension sharing arrangements

• Spousal maintenance (if applicable)

• Arrangements for debts

• Any other financial agreements you've reached

This document is shared with both parties and provides a clear record of what has been agreed. However, it's important to understand that this document is not legally binding on its own. It's a summary of your intentions, not a court order.

Step 2: Seek Legal Advice

Before turning your mediation agreement into a consent order, it's strongly recommended that you seek independent legal advice. This means each party should consult their own solicitor to review the agreement and ensure it's fair, reasonable, and in their best interests.

Your solicitor will:

• Review the terms of the agreement to make sure they're clear and enforceable

• Advise you on whether the agreement is fair, given your individual circumstances

• Explain any potential risks or considerations you might not have thought about

• Help you understand the long-term implications of the agreement

Even if you feel confident about the agreement you've reached, having a solicitor review it is an important safeguard. They can spot potential issues or ambiguities that might cause problems down the line.

Step 3: Drafting the Consent Order

Once you've received legal advice and are happy to proceed, your solicitor will draft a consent order. This is a legal document that sets out the terms of your financial agreement in a format that the court can approve.

The consent order will include:

• Details of how property, savings, and other assets will be divided

• Any arrangements for pensions

• Spousal maintenance (if applicable), including the amount and duration

• A clean break clause (if appropriate), which prevents either party from making future financial claims

• Any other financial arrangements you've agreed

Both parties need to sign the consent order, and it's usually a good idea for both solicitors to review and agree on the wording before it's submitted to the court.

Step 4: Submitting the Consent Order to the Court

Once the consent order has been drafted and signed by both parties, it needs to be submitted to the court for approval. You'll also need to include:

• A statement of information for a consent order (Form D81), which provides the court with details of your financial circumstances

• A copy of the divorce petition (if applicable) or evidence that divorce proceedings have been started

The court will review the consent order to ensure that it's fair and reasonable. In most cases, if the agreement is straightforward and both parties have had legal advice, the court will approve it without a hearing. You'll then receive a sealed (stamped) copy of the order, which is the legally binding document.

Step 5: Implementing the Agreement

Once the consent order has been approved by the court, it's time to put the agreement into action. This might involve:

• Transferring property or assets

• Arranging pension sharing orders

• Setting up payments for spousal maintenance

• Closing joint accounts or dividing savings

Your solicitor can help you understand what steps need to be taken and can assist with the practicalities of implementing the order.

What If We Don't Want a Clean Break?

In some cases, a clean break might not be appropriate. For example, if one party needs ongoing financial support (spousal maintenance), the consent order will set out the terms of that arrangement, including how much will be paid, how often, and for how long.

Even if spousal maintenance is included in your consent order, you can still have a clean break on capital (property, savings, etc.), which means that neither party can make future claims on those assets.

Your solicitor can advise you on whether a clean break is suitable for your circumstances or whether ongoing financial ties are necessary.

What If Circumstances Change?

Once a consent order is approved and sealed by the court, it's legally binding. However, in certain circumstances, it may be possible to vary the order. For example:

• If spousal maintenance has been agreed, either party can apply to the court to vary the amount if circumstances change significantly (such as a change in income or needs)

• If the order includes arrangements for children, these can be reviewed if circumstances change

However, capital settlements (such as the division of property) are usually final and can't be changed unless there was a fundamental mistake or misrepresentation at the time the order was made.

What If We Don't Formalise the Agreement?

If you choose not to formalise your mediation agreement into a consent order, you're taking a risk. Here's what could happen:

1. No legal enforcement: If one party doesn't follow through on the agreement, the other party has no legal remedy. You can't go to court to enforce an informal agreement.

2. Future claims: Without a consent order, either party could potentially bring a financial claim in the future, even if you thought everything was settled. This could happen years down the line, causing significant stress and expense.

3. Ambiguity: Informal agreements can lead to misunderstandings or disputes about what was actually agreed. A legally binding document removes this risk.

While it might seem like an unnecessary expense to formalise your agreement, the cost of not doing so could be far greater in the long run.

How Long Does the Process Take?

The time it takes to turn a mediation agreement into a consent order depends on several factors, including:

• How quickly you and your ex-partner can consult solicitors and agree on the wording of the order

• How busy the court is (processing times can vary)

• Whether there are any complications or disagreements about the terms

In straightforward cases, the process can take a few weeks to a couple of months. Your solicitor will be able to give you a more accurate timeline based on your specific circumstances.

How Much Does It Cost?

The cost of obtaining a consent order will vary depending on your solicitor's fees and the complexity of your agreement. However, it's usually much more affordable than going to court to resolve financial disputes.

Many solicitors offer fixed-fee packages for drafting and submitting consent orders, which can make costs more predictable. It's worth shopping around and asking for quotes from different solicitors.

Final Thoughts

Reaching a financial agreement in mediation is a significant achievement, and it's a testament to your ability to work together constructively. However, to protect yourself and ensure that your agreement stands the test of time, it's essential to formalise it into a legally binding consent order.

While this might feel like an extra step, it's one that provides clarity, security, and peace of mind for both parties. By taking the time to do things properly, you're setting yourself up for a smoother and more certain future.

If you've reached a financial agreement in mediation and aren't sure what to do next, speak to your mediator or a solicitor. They'll be able to guide you through the process and help you take the necessary steps to make your agreement legally binding.